Lawmakers want to ensure that minority-owned businesses get a stake in this expansion
M
embers of a Maryland House of Delegates committee on Thursday heard testimony on a detailed proposal to create the rules for legal sports betting from Democratic Speaker Adrienne A. Jones. Meanwhile, the state Senate is gradually discussing issues in a work group before introducing a bill with specifics.
Lawmakers are focused on how best to ensure that minority-owned businesses get a stake in this expansion of the gambling industry. Scores of businesses and entrepreneurs, meanwhile, are angling to get a chance to compete for licenses, with many urging lawmakers to create more — or even unlimited — sports betting licenses, The Baltimore Sun reports.
The speaker’s bill would create licenses for in-person betting at the state’s casinos and main thoroughbred horse racing tracks, plus up to five more locations that would be open to competition. There also would be 10 licenses for online betting through websites and mobile apps, and those would be open to competition. Some in the gambling industry who testified on the speaker’s bill Thursday suggested having 20 or even 24 mobile licenses in Maryland.
“More competition will bring more revenue to the state,” said John Pappas of iDEA Growth, an advocacy group for the online gaming industry. Companies will have to pay upfront application and licensing fees to the state, and the state will get a share of the profits in the form of taxes, he said.
Jason Tosches, director of government affairs for theScore, urged the House Ways and Means Committee to amend House Bill 940 to allow for 24 mobile-only sports betting licenses. Currently the bill allows 10. He said his company is licensed in multiple states. In his experience, the more licenses that there are in a state, the more that companies offer high-quality services and work to lure more bettors — potentially translating into more money for the state. “By creating competition, you continually force operators to innovate,” said Tosches, the company’s director of market development.
The owners of the state’s six casinos came to the table asking for not only licenses for in-person sports betting, which they would get under the speaker’s bill, but also guaranteed mobile licenses as well. Under the bill as proposed, they’d have to apply separately for mobile licenses. The smaller companies that want to get into the industry see the casinos as a potential barrier. If there are eight guaranteed in-person licenses at casinos and tracks, those same companies are likely to easily win most of the mobile betting licenses, too, they argue.
The number of licenses is also a concern for state senators, who are holding work group meetings with dozens of stakeholders to resolve details before proposing a bill. During Wednesday’s work group meeting, the chairman, Democratic Sen. Craig Zucker asked for suggestions on how many mobile licenses there should be, and got answers ranging from 12 to 24.
Maryland’s illegal sports betting market is estimated to be $2.7 billion per year, according to an analysis presented to the Senate work group by the Maryland Lottery and Gaming Commission. If those illegal bets turn into legal bets, the revenue to betting operators after they pay winners is $135 million to $216 million, according to the lottery’s analysis. If in-person betting is 15% of the market in Maryland, that’s $20 million to $32 million in revenues total, with each location having a slice of that. The mobile portion of the market, 85%, would have revenues of $115 million to $184 million.
Gordon Medenica, director of the state lottery, cautioned lawmakers not to have too many in-person licenses, because they might not be profitable for the operators, especially smaller locations. “It’s a very tough business to be in,” Medenica said.
Both the House and Senate are focused on ensuring that minority-owned companies and minority investors are able to participate in the sports betting industry. Jones’ bill would allow a state licensing commission to include measures to ensure minority participation, and also requires companies that win licenses to show proof of attempts to partner with minority investors.
The House has not yet scheduled a vote on the speaker’s bill, and lawmakers on the Ways and Means Committee are expected to hold work sessions on the bill before a vote. The Senate work group does not have a timeline for drafting and introducing a bill.
